National living wage to hit convenience stores including Tesco, Morrisons and Sainsbury’s

Convenience retailers warned today that they may have to reduce staff hours or cut jobs entirely to fund George Osborne’s national living wage of £9 for over-25s by 2020.

Britain’s convenience sector employs around 407,000 staff and consists of around 50,000 stores – of which fewer than 2,500 are run by Tesco, Morrisons and Sainsbury’s.

The rest are run by independent business owners, for whom the adjustment to £7.20 per hour next spring will be harder.

A report by the Association of Convenience Stores (ACS) seen by City A.M. reveals that retailers are already preparing for the pay rise after investing just £116m in their businesses over the last three months compared to £177m in the previous quarter – down 35 per cent.

When asked in a separate survey what they would do to mitigate the impact of the national living wage, 62 per cent said they will delay investment plans. Around 58 per cent said they would reduce staff numbers while 61 per cent said they would reduce staff hours.

The findings are being submitted this week to the Low Pay Commission as part of their annual review into the national minimum wage, which will also include findings on the national living wage.

ACS chief executive James Lowman said it is urging the government to reconsider its move and “go back to a minimum wage that it set by independent body and not by politicians”.

“We know from our research that retailers cut staff hours in their business when wages go up, and we expect this impact to be even greater when the sector is faced with £167m of extra wage costs next year,” he said.

The convenience sector joins a growing number of retailers that have raised concerns over rising costs, including Next, Morrisons, Card Factory and Whitbread.